When Delores Orr was going door-to-door helping her Detroit neighbours deal with the effects of one of the nation’s worst tax foreclosure crises, she was shocked at how many people didn’t know their homes were in danger or what to do about it.
As it turned out, that included her.
Orr, 72, was working with the Neighbor to Neighbor programme when it launched in 2017, joining a group of 450 people who went around their communities to alert homeowners and renters whose property taxes were in arrears.
When, as part of the canvassing, she was given a list of properties at risk of foreclosure, she saw her own address among them.
“I said, wait a minute, that’s my house!” exclaimed the lifelong Detroit resident. The home she and her brother had inherited from their mother, Orr discovered, had come with $3,000 in back taxes they didn’t know about.
“You would never believe how many people don’t know that their taxes were behind,” she told the Thomson Reuters Foundation by phone.
For years following the 2008-2009 financial crisis, Detroit had been ravaged by property tax foreclosures, automatically triggered if someone misses their property tax payments for three years in a row.
Between 2011 and 2015, a quarter of properties in the city were subject to foreclosure for unpaid property taxes, according to a 2018 study by the Chicago-Kent College of Law and Oakland University.
But foreclosures have fallen by more than 90% since their peak in 2015, Detroit Mayor Mike Duggan announced on Jan. 8, pointing to Neighbor to Neighbor as a major player in turning that tide.
While the government was taking its own steps to alert and offer support to residents who were behind on their taxes, the process was confusing and time-consuming, noted community leaders.
The biggest innovation in the fight against foreclosures, they said, was simply sending people door-to-door, talking with those at risk.
“It’s a way of life of being a Detroiter, to hear somebody is losing their house to foreclosure,” said Ray Solomon, general manager for the city’s Department of Neighborhoods.
“This is a problem that’s all hands on deck,” he said in a phone interview.
FACE-TO-FACE
Still reeling from the decline of the auto industry, Detroit has one of the highest property taxes in the country, which a 2016 study from the Lincoln Institute of Land Policy, a U.S. think tank, found was linked to low property values.
With that has come significant tax delinquency.
Citing county figures, Laura Grannemann, vice president of strategic investments with the Quicken Loans Community Fund, which runs Neighbor to Neighbor, noted that Detroit has seen 150,000 tax foreclosures over the past 15 years.
That is “an extraordinary drain on homeownership,” she said.
In Detroit, as in many cities, programmes already existed to shield the most vulnerable from losing their homes to unpaid taxes.
But many say the various forms of government support were not widely discussed and were complicated to apply for.
“It wasn’t largely advertised, so you had to be in the know,” said Tracy Smith, a programme manager with the Central Detroit Christian Community Development Corporation, a non-profit and Neighbor to Neighbor partner.
And those who did find out often were already facing foreclosure, meaning they had already missed two or three years of tax payments and likely owed significant interest on that amount, she added over the phone.
According to Grannemann, the idea behind Neighbor to Neighbor was both simple and desperate: make face-to-face contact with owners or tenants of all Detroit properties with delinquent taxes, well in advance of that dangerous third year.
“We realised no one had gone door-to-door and asked people what their experience was,” she said.
Armed with delinquency information from the public record, canvassers such as Orr spoke to residents about tax exemptions and other potential resources.
RENTERS MOST VULNERABLE
Grannemann explained that the first Neighbor to Neighbor census saw people comb the streets for four months between 2017 and 2018, eventually contacting residents at all 60,000 properties that were chronically behind on their taxes.
The programme did the same last year and is planning another census for this spring, she added.
In its first census, Neighbor to Neighbor found that about 75% of the residents contacted that year qualified for exemptions, meaning they should not have been paying property taxes in the first place.
Renters were the most vulnerable, the programme found, with almost three-quarters of those contacted not knowing that the owners of the homes they were renting had not been paying taxes — and that they were at risk of eviction.
Since the programme started, Neighbor to Neighbor has been working with the city to enable renters in that situation to pay off the properties’ back taxes and even purchase the home themselves.
In 2018, more than 500 renters ended up buying their homes through this initiative, Grannemann said.
That year alone, the programme helped more than 4,300 families avoid foreclosure, according to the latest data available.
The programme organisers also worked with local officials to streamline the applications processes for tax exemptions.
Official data revealed that more than 7,600 Detroit residents took advantage of tax exemptions last year, up 30% from the previous year.
Working with the programme is helping the city get ahead of the foreclosure crisis, said Chelsea Neblett, a manager with the city’s Financial Empowerment Center, which gives free financial counselling to residents.
“For a long time we were reactionary, assisting people in immediate danger,” she said by phone, noting that the city is also coming up with its own solutions for vulnerable residents.
Neighbour to Neighbor is “allowing us to become more proactive.”
‘ALLOWED ME TO BREATHE’
Property taxes are rising in cities across the country and tax delinquency disproportionately affects minority households, said Alanna McCargo, vice president of housing finance policy at the Urban Institute, a Washington think tank.
Efforts to resolve the problem should be a “top priority so that foreclosure doesn’t happen,” she said in emailed comments.
Grannemann of the Quicken Loans Community Fund said other cities are taking notice of the Neighbor to Neighbor programme, and she and her colleagues have been in contact with local officials elsewhere to try out similar strategies.
For Orr, meanwhile, the discovery that she might lose her house prompted her to panic. But through her work with Neighbor to Neighbor, she learned that she qualified for a full tax exemption going forward.
She is now almost finished paying off the back taxes, and her daughter found out in December that she is likewise exempt.
“It allowed me to breathe,” Orr said.